Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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COBRA benefits employees

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act of 1985. It is a temporary extension of your group health plan insurance coverage.

This law was enacted by the United States Federal Government to give you alternative health care options when you lose health insurance coverage due to a qualifying event.

If you are in the process of obtaining insurance quotes use the free rate tool on this page!

By law, most employers must offer COBRA when an employee is no longer covered under a group health insurance plan due to a qualifying event. Group health insurance plans are typically offered by employers who have 20 or more employees.

Qualifying Events

Qualifying events are specific situations that result in the loss of your group health insurance plan coverage.

Qualifying events include termination (voluntary or involuntary) of your employment (or loss of coverage due to a decrease in work hours), a change in your marital status, a change in one of your dependent’s status, when you become eligible for Medicare, or the death of the insured person. You will receive a notice advising you of your option to elect COBRA within 2 weeks of notifying your employer of your qualifying event.

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Group Health Plan Coverage under COBRA

Your group health plan coverage will not change under COBRA. It is a continuation of your previous health plan policy. Co-payments and deductibles will still be in effect. The most significant change will be in the amount of money you are paying out of pocket to continue your health care insurance coverage.

Most employers pay a portion (or sometimes all) of your health care premium costs while you are working for them. Under COBRA, you will be responsible for the entire cost of your health care insurance premium so, yes, your health insurance rates will increase.

Time Limits

When you lose your group health plan coverage, you have 60 days to inform your employer of your request to opt into COBRA. If you do not let your employer know within that timeframe that you want to continue with COBRA coverage, you (and your family, if they were included in the health insurance policy prior to the qualifying event) will lose the option of continuing your group health plan coverage.

If You Move

If you move out of the location where the group health plan is covered, you may lose your health care coverage. However, your employer may have an alternative group health care plan that you would be eligible to enroll in at your new location. When you move, you will need to inquire about whether or not your health insurance plan provides coverage in your new place of residence.

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What COBRA Costs

What you pay for COBRA coverage will depend on what your entire premium cost was for your group health insurance coverage prior to your qualifying event. Your COBRA premium cost will more than likely be higher than what you were contributing towards your health insurance coverage prior to your qualifying event, but more affordable than if you had to purchase health insurance coverage on your own.

In addition, employers are permitted to add a 2% administrative fee to your health insurance coverage premium cost. COBRA premiums must be paid within 45 days of opting in, or you will lose your health insurance coverage.

Benefits Eligibility

If you had a spouse and/or dependents listed on your group health insurance policy prior to your qualifying event, they are eligible for continued medical coverage under COBRA as well. You can choose to continue health insurance coverage under COBRA for some or all family members who were covered under your employer’s group health plan before your qualifying event.

How Long You are Covered under COBRA

You will be eligible for COBRA benefits for up to 18 months based upon when you lose your group health insurance coverage. Under certain circumstances, you may be eligible for an extension of your COBRA benefits if you become “disabled” according to the Social Security Administration.

The administration fee for this may be as much as 50% of the total plan cost for this coverage, bringing the entire cost of your health insurance to up to 150% of the premium. Compare this cost with private health insurance rates by using the third party quote tool provided on this page at no charge.

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Termination of COBRA Benefits

You can choose to end your COBRA benefits at any time. In addition, COBRA coverage will cease if you do not make your premium payments on time. They may also end if/when your company changes or ends its existing health insurance plan, you get another alternative health insurance plan, you reach the age where you are eligible for Medicare, you move to an area where your plan does not provide health coverage, you file claims that are false, if you were disabled but recover from your disability, or your coverage period under COBRA ends.

You can compare the cost of different private health insurance coverage premiums to the cost of COBRA by entering your zip code below!